Entertainment

Why Pay-Per-Click Ads Are Wasting Your Money

Raj De Datta is CEO and co-founder of BloomReach. Most recently, he was an entrepreneur-in-residence at Mohr-Davidow Ventures. Follow the company at @bloomreachinc.

Paid click campaigns are valuable traffic drivers, but they could be doing a lot more considering that half the time they don’t work. Research my company conducted indicates that non-branded paid clicks have a 55% bounce rate from their landing pages. Google Analytics and KISSmetrics reports put the range from 10% to 90% with new visitors bouncing 62.9% of the time from paid search clicks.

What these numbers indicate is that only about half of paid clicks actually drive conversion from new visitors they attract. That is the equivalent of throwing away $.55 of every marketing dollar. That’s not to say paid clicks aren’t a good idea, but rather that they can and should be more effective and efficient.

According to Conductor, an SEO platform, there's an average online conversion rate of just 2.5% for visitors across all channels. Marketers need to invest in resources that maximize conversion from paid search traffic, often their largest digital line item. In paid search, there are two ways to bid: exact match or broad match.

The choice means most paid search marketers are forced to choose between scale and profitability, depending on how they bid. Exact match can offer profitability but lacks scale and it only wins if the query matches the exact keywords you chose. Broad match includes other content too, which is why it offers great scale, but it’s less profitable because it's not as accurate.

For example, “gold link earrings” as a keyword is an exact match that, if associated with a landing page displaying a collection of gold link earrings, is likely to motivate customer conversion. But if you bought the terms “gold earrings” on a broad match, searches for “gold link earrings,” “gold hoop earrings” and “gold and silver earrings” might lead to a generic gold earrings landing page that might or might not have link, hoop, or gold and silver featured. The customers likely do not find the gold link earrings they were specifically looking for, and they leave your page. To add insult to injury, you might actually have gold link earrings available on your site but because it’s not part of your landing page, the opportunity is wasted.

Ultimately a relevant landing page makes the difference when completing the marketing process that began with a paid click. A relevant landing page is created by selecting keywords, bidding strategically on those keywords, and writing compelling ad copy. Once those items are addressed, it's important to maximize landing page relevance by adapting to search intent and product catalogs, which requires rigorous Big Data science. This science refers to the algorithms and data management techniques for handling very large, distributed, and unstructured data sets. Hadoop, IBM, and MarkLogic are companies that have built Big Data infrastructures that find patterns in data sets that otherwise feel disparate.

The disparate quality of data lies in the fact that 90% of Web content was created in the past two years. There is a tremendous amount of content that is never found by people because the volume is growing rapidly, changing frequently (about 40% of product information changes per month), and is structured in a browsing hierarchy that leaves many content-rich pages undiscovered. Pages are basically buried deep in a site without many links in and out to guide consumers and crawlers who don’t land on the right page. On the paid side, even fewer pages get found because it's not cost efficient to manually create relevant landing pages for every product and ad group needed.

Big Data technology bridges the gap because it understands consumer intent, and ultimately offers the most relevant results. As a result, Big Data applications are changing the landscape of data-driven online marketing and making search – both paid and natural – more effective than ever.

In essence, Big Data applications turn data into something more useful — beyond analytics and into actions. Analytics are useful and should guide strategy, but often, by the time a business acts on the analytics, the trends have shifted. Big Data apps react when the trend is happening so that users of those apps realize the benefits immediately. Nowhere is that more important than in maximizing the conversion of qualified, interested consumers who click on a paid search ad to answer their query. As Big Data apps help companies connect customers with products more efficiently, companies will see their ad dollars and content go further than they do with paid search alone.

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